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Telecom Italia to sell stake in Argentina unit

Telecom Italia has announced it is to sell 17% stake of its subsidiary, Telecom Argentina to New York-based investor firm Fintech. The Italian incumbent said it plans to sell Telecom Argentina’s holding company Sofora’s entire shareholding to Fintech once it has received regulatory approval from the Argentinian regulator SECOM.

The sale of Sofora to Fintech, owned by Mexican billionaire David Martínez, was already agreed almost a year ago, but SECOM has yet to approve the deal. Telecom Italia said it expects the transaction to go through within two and a half years. Of the total $960 million asking price for the controlling 68% holding in Sofora, Fintech has already paid $113.7 million, and will lay another $215.7 million on the table by the end of October to take over the 17% stake.

Telecom Italia’s attempted exit from the Argentinian market is part of the operator’s wider €4 billion strategy to cut back on its debt, currently somewhere around €27 billion, and to fund investments in Italy and Brazil.

Telecom Italia has been under increasing pressure in the South American market after it recently lost in a bid to acquire Brazilian GVT to rival Telefónica. This has sparked speculation on the telco’s future as some said it was left vulnerable to take-over bids especially in Brazil, where it operates under subsidiary TIM Participacoes.

However, reportedly the company has since mulled over a bid for Brazilian Oi to strengthen its position against competitors, though there has been no further confirmation of this going ahead. It has also been reported the telco wants to sell TIM’s mobile towers to raise €900 million, although according to quoted sources bids have so far only fetched to €500-600 million. Meanwhile Telecom Italia CEO, Marco Patuano apparently said TIM Participacoes can survive as it is for another five years before embarking on the M&A train.

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